The Financial Markets Authority is investigating the role of financial advisers who recommended clients put money into the collapsed investment company Ross Asset Management.

The regulator says a "small number" of clients invested with Ross on the basis of recommendations by their financial advisers - not including David Ross, who was himself a registered authorised financial adviser.

"We are actively engaging with those advisers and will take appropriate action where, after investigation, any breaches are discovered," a spokesman said.

The FMA refused to name advisers under investigation. Ross's own adviser business - which appears to have operated as a quasi funds management company - was not reviewed by the FMA until regulators swooped.

Investor spokesman Bruce Tichbon said some investors had already started legal action against advisers who put them into the failed scheme, including authorised financial advisers.

"I have been told people were advised to go to David Ross by all manner of advisers, from the biggest names in New Zealand down," he said.

Some advisers told people to put only a small percentage of their assets into RAM because of the risk, or to pull out their principal investment once they had got strong returns, Tichbon said.

For example: "If you put $100,000 in and David Ross says that after a while that it's worth $200,000, pull your $100,000 out.

"A lot of people are desperately hurt that were advised to use David Ross by respectable advisers."

RAM lacked an independent trustee or independently audited returns and was largely a one-man band. Its assets appeared skewed towards volatile shares.

Retirement Commissioner Diana Crossan said she knew of investors who had trusted money to Ross on the basis of professional financial advice.

Crossan said it was unfair to suggest, as some commentators had, that Ross investors were all snared by greed. Some checked with both accountants and financial advisers before making the investments.

"From time to time there will be someone who is so plausible that they beat all the rules," she said.

Tichbon said there was likely to be major conflict between people who withdrew strong returns and those who invested later and made big losses.

"There are people who have done very well out of RAM - there are people who have taken out the price of a farm," he said. "It appears we are heading toward horrific legal combat. So much money will be spent unravelling the activities of one man."

Law firm Grimshaw & Co acted for clients who lost money in finance companies after advice from authorised financial advisers, the only class of adviser in New Zealand legally allowed to give personalised advice on complex financial products such as managed funds.

This year the High Court ordered adviser Rodney Hartles of Hamilton to pay $90,000 to a Grimshaw & Co client, retired pharmacist Kenneth Gilmour, after losses he suffered in the collapse of finance company Bridgecorp in 2007.

Grimshaw & Co partner Gareth Lewis said advisers could be ordered to pay if negligence was proven. That could be where an investment was inappropriate for someone at their age and stage of life, where they were not made aware of the risk, or if an adviser had taken commission without fully getting to know the client's needs.